The IRS is asking a bankruptcy court to torpedo Solyndra's plan for a Chapter 11 reorganization, saying that its "principal purpose is tax avoidance," the Wall Street Journal reports in an editorial today, explaining what it calls the "Solyndra memorial tax break." Solyndra's only remaining assets, the Journal explains, are its tax credits; it has $12 million in solar credits, and up to $975 million in losses, which can offset future taxes. The company wants to hand those off to a dummy company owned by its biggest shareholder, Argonaut Ventures.
All this is possible thanks to a Department of Energy deal, in which it agrees to subordinate the taxpayers' loans to a new one from Argonaut—which, the deal stipulates, would walk away with the tax assets if Solyndra went belly-up, something emails verify Argonaut fully expected. One White House staffer at the time wrote that the DoE appeared to be skirting a legal requirement forbidding it from taking a junior debt position. "This raises a question or two for the President," the Journal writes. "Does he have to stick it to taxpayers twice for the same failed investment?" Read the editorial here. (Read more Department of Energy stories.)